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A quick primer on what you need to know as a teen trying to build wealth & top 3 misconceptions and misunderstandings.
Time is the only thing money cannot buy. Ironically, it is what makes all the difference in terms of building personal wealth. A lot of concepts, jargon and systems go into understanding finance - some are relevant and some aren't. Today, we'll give you a quick primer on what you need to know as a teen trying to build wealth.
Popular guides and articles simply skip over the concept of budgeting without an income - despite it being an essential concept for teens, students and low income communities.
We already know that saving is money you do not spend and spendings is money that you use now. This takes us to budgeting, which is usually balance of your income and expenses. But how do you budget without an income?
Income Methods that make a difference over time
Not recommended: Drop shipping, affiliate marketing and amazon re-selling take time to build without guaranteed success. If you see a creator claim the methods above are their primary income, it's likely that they are selling a course or have their own affiliate deals.
As cash quickly becomes inconvenient, we're turning to a world of credit and debit. For the consumer, it's important to differentiate these and know that even as a minor there are ways you can get a card.
Debit Cards link directly to your bank account. Anything you pay for using a debit card, is deducted directly from your bank account.
Credit Cards are usually issued by banks and give you a set amount of money, let's say $2500. This money does not come from a bank. If you spent $500 that month, you would then pay the bank or company that issued the card the $500. Depending on how late or early you pay that credit fee, your credit score increases or decreases.
Your credit score shows banks, rental services and sellers how reliable and responsible you are with your money. A low credit score can affect your ability to get a mortgage, buy a home or make larger purchases (a car). It's important to build credit score as early as possible. As a minor, you can setup a credit account under a custodial service. Apps like Step are popular for teens while still giving the parent power to monitor their teen.
Allan for Bloom
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